DISABILITY AND SOCIAL SECURITY PAYMENTS TO END IN 2021 AND 2023 DUE TO TRUMP PAYROLL TAX CUTS, AGENCY’S CHIEF ACTUARY WARNS

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It’s bad enough that seniors and people with disabilities are bearing the brunt of the COVID-19 pandemic. Using it as a subterfuge to undermine their financial security is unconscionable and unacceptable.” -- National Education Action

By Miriam Raftery

August 29, 2020 (Washington D.C.) – Disability payments will end next year and Social Security payments to the elderly will stop in 2023 under President Trump’s executive order to cut payroll taxes, which took effect Friday, unless alternative funding is provided, Market Watch reports. That dire warning was issued August 24 by the program’s Chief Actuary, Stephen Goss, in a letter to key Senators.

Effective Aug. 28, Trump’s executive order temporarily suspends the 6.2% payroll tax collections from employers for employees under $104,000, which is used to fund Social Security and disability payments. (Employers until now have matched a 6.2% deduction paid by workers.)

Trump wants to make that permanent if reelected. On Aug. 8, Trump stated, “If I’m victorious on Nov. 3, I plan to forgive these taxes and make permanent cuts to the payroll tax.” He made clear, “In other words, I’ll extend it beyond the end of the year and terminate the tax.”

But Goss, the Chief Actuary for the Social Security and Disability Insurance programs, warns that making the cut permanent will mean the near-immediate end of both programs.  In his letter, he warns that if the payroll tax cut is eliminated with no alternative source of revenue to replace it (and Trump has not proposed any alternatives), “We estimate that DI (disability insurance) Trust Fund asset reserves would become permanently depleted in about the middle of calendar year 2021, with no ability to pay DI benefits thereafter. We estimate that OASI Trust Fund reserves would become permanently depleted by the middle of calendar year 2023, with no ability to pay OASI (Social Security) benefits thereafter.”

For many elderly and disabled people without pensions or paychecks, those payments are their only income sources – and many are not physically able to work. Prior to adoption of Social Security under President Franklin Roosevelt in the 1930s, 50% of U.S. seniors lived below the federal poverty level.  Adoption of Social Security reduced that to 10%, giving seniors dignity and security. Seniors have paid into the system throughout their working careers, so ending the program would rob them of their investment.

The National Education Action, in an email to members in the education field, called the cuts the “potentially worst of all” proposals.  According to the  NEA, suspending collection of the payroll tax that funds Social Security and Medicare for the rest of this year is a “backdoor approach to dismantling both programs as we know them. He has pledged to cancel the tax permanently if reelected – a move that would put their very existence of these essential programs at extreme risk.”

The education group concludes, “It’s bad enough that seniors and people with disabilities are bearing the brunt of the COVID-19 pandemic. Using it as a subterfuge to undermine their financial security is unconscionable and unacceptable.”

 

 

 



 


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Comments

Social Security HYPOTHETICALLY will end. SHAME ON YOU

You are purposely misleading the public Social Security will end under President Trumps re-election. That is not true. Why would you scare us all? Did you bother to read the actual letter? It clearly states it is a HYPOTHETICAL example of what MIGHT happen. No where does it state it will happen. The letter is an answer to a letter written by democrat Chuck Schumer looking for dirt on Trump, requesting Trumps lowering taxes what affect it COULD have on Social Security. President Trump has clearly stated Social Security will NEVER BE TAKEN AWAY. I thought your magazine was impartial, but I see it is not.

Here are more Social Security facts you may not know,but should:

Trump has called for eliminating the payroll tax completely, on video, and it is true that the Social Security and Disability Actuary says if that happened without a new funding source, checks would stop being issued in 2021 and 2023 for disability and Social Security respectively.   If the tax cut went through with no new funding source, it’s a fact that that would leave people without their benefit checks, though of course if that doesn’t occur, it would not happen. I did not say it WILL happen.  It all depends on what Trump actually does.

Yes, the president said he would protect Social Security even though he wants to eliminate the primary source of funding for it.

But this particular president has been caught by fact checkers lying about many more things than any other president in history.  According to the  Washington Post, for example, Pres. Trump has made over 20,000 false or misleading statements as of July:  https://www.washingtonpost.com/politics/2020/07/13/president-trump-has-made-more-than-20000-false-or-misleading-claims/   More on his veracity here:  https://en.wikipedia.org/wiki/Veracity_of_statements_by_Donald_Trump So his word is not particularly reliable based on that track record, unfortunately.  By contrast I’ve heard nothing to dispute the integrity of the actuary who is actually the expert running the programs.

There is also no reason to believe that a Senate led by Mitch McConnell would approve a new funding source, such as using general funds, which takes money away from other areas. In 2018, McConnell is on record calling for cuts to Social Security, as Forbes reported, even though this was unpopular:  https://www.forbes.com/sites/teresaghilarducci/2018/11/02/republican-public-opposition-to-social-security-and-medicare/#32946c944e71

Moreover,  the article discusses the history of the Republican party efforts to oppose, privatize, or weaken Social Security essentially making it not so secure:

The Republican Party has always been associated with opposition to Social Security. Economic historian Max Skidmore shows that the final vote for Social Security was lopsided--only 2% of Democrats voted against it (because it wasn't generous enough) while 33% of Republicans voted against Social Security.

Historian Arthur Schlesinger (page 311) notes that the Republicans echoed corporate opposition to Social Security.  A representative of the Illinois manufacturers testified that if Social Security was passed it would undermine America by “destroying initiative, discouraging thrift, and stifling individual responsibility.” In 1935, Republican congressman John Taber said Social Security “is designed to prevent business recovery, to enslave workers, and to prevent any possibility of the employers providing work for the people.”

In the 1970s the conservative Cato Institute made shrinking Social Security through privatization its primary objective and in 2005 George W. Bush tried to replace Social Security with private investment accounts. The Bush privatization plan failed.  Though Republicans supported it, no Democrat in Congress would agree and the balance was such the Republicans had to convince at least one Senator to switch sides.

That’s just one of many articles on this topic.

Privatizing Social Security has problems too, such as putting retirement savings at the whims of the stock market:  https://www.cnbc.com/2018/03/26/privatization-is-really-a-plan-to-dismantle-social-security.html  That may be okay for younger people who can ride out ups and downs, but not for older people set to retire soon. Granted, MSBNC is a liberal leaning source, but the same concerns can be found in various media reports over the past couple of years. 

How about this from the Social Security bulletin itself?   It turns out a number of Latin American countries have already tried privatizing their social security-type programs, under pressure form corporationst o do so,  and it led to some major problems:  https://www.ssa.gov/policy/docs/ssb/v63n2/v63n2p17.pdf

All of the countries continue to face unresolved issues, including:

* High rates of noncompliance --  the percentage of enrollees who do not actively and regularly contribute to their accounts--which could lead to low benefits and greater costs to theg overnments that offer a guaranteed minimum benefit;

*  Proportionately lower benefits for women and lower earners than for men and higher earners;

*  A minimum required rate of return among the pension fund management companies (in most of these countries)that has resulted in similarity among the companies and the consequent lack of meaningful choice; and

*  High administrative fees in most of these countries, which reduce the individual’s effective rate of return.

To what extent these issues can be mitigated or resolved in the future is not yet clear. In general, a definitive assessment oft he Chilean model and its Latin American variations will not be possible until a cohort of retirees has spent most of its career unde rthe new system.

Bottom line, if anything we may not have provided enough context into the history of efforts to weaken or “reform” Social Security and the poor track record of places that followed the corporate proposals and tried to privatize their retirees’ investments.

I’m not into gambling with the retirement funds I’ve paid in, and I'm close to retirement age. Many other Americans share that concern.  It’s important to let people know the risks here.  I don’t care if they vote red, blue, green or purple – it’s a matter of our duty as media to be sure readers are fully informed on matters that could affect them directly and financially, as this very well could.

 

Perhaps we should consider a more detailed look at the history of the program and efforts disguised as “reform” that do not appear to strengthen the security of those elderly or disabled recipients.

According to 8East "Fake News" and he is WRONG

8East headed his comment with “Fake News.....again. SMH”

He then linked to an article online. I explained that one of the problems with democracy in U.S. is people forming opinions without doing the research. I should have included that sometimes they form their opinions from one article without actually either reading it or understanding it. I also explained how, besides getting Congress to approve using general revenues, it would go against the express design of Social Security that each person would contribute to his or her own account. And, as the article states that we will have a huge deficit and only a miracle will grow the economy even close to being able to pay for current programs and add on Social Security. Just one more example of how Trump, without consulting with experts, without actually studying SSA, just pulls things out of one of his orifices, regardless of it being valid. And given his overall contempt for those in the lower economic strata, I doubt he really cares about Social Security. So, not exactly “Fake News” as claimed by 8East.

The article 8 East linked to is entitled: “Fact check: President Trump has not said he will terminate Social Security” at: https://www.usatoday.com/story/news/factcheck/2020/08/15/fact-check-dona...

OK, so Trump didn’t outright say his goal was to terminate Social Security; but . . . The article goes on to state:

One of the Aug. 8 executive orders instructed the Treasury Department to allow employers to defer payment of payroll taxes for employees who make less than $100,000 each year.

The order also instructed Treasury Secretary Steven Mnuchin to "explore avenues, including legislation, to eliminate the obligation to pay the taxes deferred”

“If I’m victorious on November 3rd, I plan to forgive these taxes and make permanent cuts to the payroll tax," Trump said, per the Washington Post. “I’m going to make them all permanent.”

Trump suggested an alternate source for the first time – the general fund of government revenues

When questioned about the $2.8 trillion deficit now facing the federal government, Trump claimed the economy is “going to have tremendous growth” next year.

Notably, it's not within a president's power to unilaterally change tax law or re-appropriate government funds, experts told the New York Times. 

If reelected, Trump could continue to defer the payroll tax with executive orders, but he could not eliminate the payroll tax entirely or provide a new source of funding for Social Security without support from Congress.

Social Security Works argued that advocating for termination of the payroll tax and termination of Social Security are the same. The payroll tax is known as the Federal Insurance Contribution Act tax, after all. . . there is "not" a distinction between cutting Social Security and cutting its dedicated source of funding

ADDENDUM

I should also point out that the funds being used to help Americans during the current crisis are adding to the National Debt. If the three Republican administrations had NOT lowered taxes on the corporations and wealthy, the National Debt would be much smaller and the current crisis would be more affordable; but given working and middle class service the debt, it will be an additional future burden, lowering again investment in infrastructure and helping those in need, basically "there but for the Grace of God go I". 

And reports have come out that some of the monies have gone to wealthy corporations with large cash reserves and not used to maintain employment, some going to Trump companies. Golly gee, who would have guessed???

One last point, Trump's "Make America Great Again." Many Americans keep claiming this is a Christian land; but there are over 1/2 dozen places in Old Testament and 1/2 dozen in New Testament that list the Seven Deadly Sins and since Middle Ages, guess which one considered the Deadliest Sin, yep, PRIDE. Oops!

Why FICA is essential for Social Security

If you read how Social Security was developed, in essence to NOT be any type of socialism; but to be based on each person's individual contribution, then, besides highly unlikely Congress will approve, claim that "Social Security could be funded using general fund revenue or alternative revenue source" would end its specific design. In addition, under Republican administrations, Reagan, Bush Jr. and Trump, taxes on corporations and the wealthy were successively reduced. Since the middle class has been shrinking and incomes overall have stagnated, slightly increasing, compared to the 1%, and we have been investing less and less on government programs, including a deteriorating infrastructure, and less help for those in need, using general funds for Social Security would only end in furthering deterioration of our infrastructure and reducing further social programs helping those in need. The reduction in taxes on corporations and wealthy significantly added to our national debt which, in turn, also takes money from general revenues to pay the interest (while currently low, hasn't alway been, and no guarantee it will not increase). So Republican administations have enriched the corporations and wealthy at the expense of everyone else. In short, FICA tax was intentionally developed to make SSA not socialistic. 

One last point, the Social Security Trust Fund, what I consider one of the biggest frauds ever perpetrated on the American people. When Reagan's tax cuts, based on a UCLA economist named Arthur Laffer who predicted lowering tax cuts would stimulate the economy leading to actually more taxes collected FAILED, polls showed Reagan losing support. Around that time the Social Security Commission did its projection of SSA 75 years into the future, coming up with three projections based on possible economic growth. One predicted SSA would have a shortfall, don't remember exactly when; but probably a couple of decades in the future. The simple solutions would be to increase the cap and/or FICA tax the year before, either or both would have been minimal. And increase in small amounts as needed. What they did is increase the FICA tax to create a huge surplus. They loaned this surplus to the Treasury which used it for government operations and issue Treasury Certificates. So, the Trust fund is the same treasury certificates/bonds that make up the National Debt. However, when one federal government entity loans money to another it is not included in debt. So, the Social Security trust fund is simply debt not counted as such. But it made the federal deficit appear to go down. In addition, since Reagan lowered taxes on the corporations and wealthy, it was from general revenues that the interest rate, higher at the time, was paid on the treasury certificates in the SSA Trust Fund, and it is from general revenues that the fund is and will be redeemed to pay SSA not covered by the FICA tax. So three Republican administrations have lowered taxes on Corporations and the wealthy, income for middle class and working class have more or less stagnated and they have to pay interest and redeem the Trust Fund. So, what Republicans managed to do is have middle and working class, in essence, pay more into current general revenues to start with and now even more as Trust Fund retired. Thus, leaving less for infrastructure and helping those in need.

Of course, Corporations and the wealthy are doing super.

A Perspective on Trump

Adolf Hitler: “The Bigger the Lie, the more people believe it.”

Basically, if a lie is big enough some people will think no one could lie that big so it must be true.

Netflix has a fascinating documentary on Roger Stone, perhaps the man most responsible for Trump’s rise to President. Stone subscribes to lying big as part of politics and a lot more. Watch it: “Get Me Roger Stone”

and PBS has another documentary entitled “The United States of Conspiracy”

Pulitzer Prize winning Historian Richard Hofstadter wrote a famous essay entitled “The Paranoid Style in American Politics.” Well worth reading. Available online at: https://harpers.org/archive/1964/11/the-paranoid-style-in-american-polit...

I can suggest a lot more; but the above might give open-minded people another perspective on what is going on today

@ 8East

Obviously you missed one key point, namely that reducing or eliminating the FICA tax, even for a few months, will have NO effect on employment. And you miss that most, if not all of Trump's claims are outright lies. After being told of the risks of COVID-19. he delayed several weeks before banning Chinese from flying into the U.S. During that time, over 300,000 entered the U.S. from China and he didn't ban Americans from returning from China, so after the ban, 10,000 Americans entered the U.S. without being screened. Thus, closing the barn door after COVID-19 had entered the country.And to this day he hasn't implemented the 1950s Defense Procurement Act which empowers the President to order factories to produce certain goods during an emergency, of course, with fair reimbursement. So, after over six months of COVID-19, we still have a shortage of Personal Protective Equipment. And, as I explained, even for those who don't believe in global warming, the pollutants from fossil fuels shortens average life expectancy by 2 years, causes around 150,000 premature deaths, 100s of thousands of decreased quality of life from respiratory, cardiovascular, and other diseases; yet Trump wants to lower car mileage, has weakened EPA standards, and on and on it goes. He has rejected scientific advice and, despite any related education, thinks he knows best. We have NEVER had anyone like him in the Presidency, someone who lives in his own malignant narcissistic world. And why does he refuse to divulge his tax returns. No other President nor Presidential candidate has. What does he have to hide?

Though I never rely on one source, I did read his niece, Mary Trump's book about him "Too Much and Never Enough". Well worth a read.

And as I pointed out, people like you make up your minds without doing the research.

Just as an example, I have read both of Adam Smith's book, several books of Karl Marx, F.A. Hayek's, the founder of Libertarian economic, books, Milton Friedman, etc. In other words, I have read across the spectrum of economics. 

One more point

What do you base your claim that Social Security is ripe with fraud? For me, I own and have read several books on history of Social Security, have read several governmental reports and probably 40 or 50 journal articles. What have you read???

And SSA isn't going bankrupt. It will have a shortfall if no changes are made. In that case, it will still be able to pay people; but probably only 75% of what they are getting today. However, there are a number of rather simple fixes. First, up the cap, the amount of income that SSA can be taken from to the 1980 level. That alone will have a significant effect  

I'm sure you really don't understand just how important Social Security, Medicare, and Medicaid are. Rural rednecks who are against Medicaid because they think mostly used by minorities, not true, don't realize that it subsidizes rural hospitals that are closing in record numbers. And as I mentioned, if Social Security is harmed, 10s of millions will not be able to purchase things. And privatizing it will make things worse. If SSA had been in private equity funds in 2008, it would have been a disaster. Wall Street would love to privatize SSA as they would make a fortune managing different funds; but people ignore that even if it appears their investments are growing that when paid out the managers will take a significant chunk.

However, once again, what do you base your claim about SSA on?????

The difference between Joel Harrison and 8East

One of these posters uses their real name because they are confident in their presentation and unafraid to live out loud, as patriots do. The other hides behind the skirt the internet can provide for cowards. (And one has many well known sock puppets too, none of them with a real name. Possibly we are dealing with a Russian here.) One has to evaluate their opinions in this most American of contexts: Courage is conviction, hiding in the shadows and sock puppeting is literally shady. One is worthy, and the other as Jerry Brown once said of Texas, little more than a fart. Brett Stalbaum, Shelter Valley CA

Fake News.....again. SMH

You folks really should make it a habit of fact-checking your sources prior to publishing them on the website. That is, if you're actually interested in factually reporting the news? Although our President has previously promised to overhaul the Social Security and Disability programs, which are both rife with fraud, he's made no such claims to "End" either program. In the example above, the key quote you failed to include, was his response which was this “At the end of the year, on the assumption that I win, I’m going to terminate the payroll tax,” Trump said during a press briefing at the White House. “We’ll be paying into Social Security through the general fund.”" He also wrote this in an email "Strictly speaking, Social Security could be funded using general fund revenue or alternative revenue source, so terminating a tax and terminating a program are distinct things," and he also said this in the same interview ""We protect Social Security," Although this information can be readily found all over the Internet, I'll include a link Here and refrain from using any conservative sources so you don't discount the actual conversation. So much for "Investigative Journalism", let me know if you need some fact-checking assistance going forward, so we can eliminate the "Alternative Facts" which have become all too commonplace. C'mon ECM - Be better.

If you defund a program without an alternative funding source,

that ends the program.  He can't unilaterally decide to pay through the general fund and even if he gets Congress to approve that (which Republican leaders don't want), it would have to come up every year for funding approval again.  I for one don't want my retirement funding to be Russian Roulette each year with Congressional appropriations. The payroll tax cut has provided a stable funding source for decades.  I am just a couple of years away from retiring on Social Security myself and don't want my ability to pay bills each month dependent on the whims of Congress each year, do you? And there is no guarantee that Congress will even approve that even one, yet alone annually for the rest of our lives. 

A Betrayal of Trust & Devastating Blow to Economy

Generations of Americans have, through FICA, paid for Social Security for previous generations with promise, in turn, they will also be covered. Since Social Security is received by more than 60 million Americans and the main source of income for over 60% of them, 36 million or more Americans won't be able to pay their rents, for food, for Medicare supplements, for copays and deductibles and many other things. This will have a major downward spiraling effect on our economy. A recession to be sure; but, perhaps, even a depression.

The FICA tax is for those working and its cost is a minimal part of a worker's pay packet (total cost to employer which includes salary, unemployment, disability, health insurance if provided, etc). Lowering it will NOT increase employment, not now and certainly not when Social Security ends, lowering the purchasing power of many Americans. In addition, the working generation will see their parents, grandparents, other older family members suffering and betrayed. Those capable will try to help, perhaps, allowing some to move in with them, perhaps tight quarters, lowering of their living standards, etc.

Just one more example of Trump's short-sighted lack of understanding; but contempt for others. And Trump supporters, since they too are SSA recipients or approaching retirement age or have loved family members who will be betrayed. On the other hand, the Stock Market is soaring, so why care about the 99% when the 1% is doing ever better.

Unfortunately many studies have shown that people react to what politicians say without doing their own research. Whether one liked Obama or not, employment increased at double the rate compared to Trump prior to the Pandemic. And our trade deficit with China, even now, is huge. 

Personally, I don't like the choices we have; but given only two choices, the lesser of the two evils is all we have. And Americans should learn what "socialism" really is rather than react to the word by anger and closing their minds. Neither Biden nor Harris have ever called for nationalization of industry. I went to public schools where the buildings were owned by the city and salaries paid. I enjoy the security of having a fire department. And our government has over and over taken our tax monies to benefit corporations and the super rich, e.g., the bank bailout of 2009, cost overruns for weapons. It is NOT socialism to have things like Social Security where workers and employers pay into it, only to benefit when it's their turn. It is NOT socialism to take care of those incapable for various reasons. It is a sense of community and that we are ALL vulnerable.

And it is what Jesus asked of us, to give drink to the thirsty, to give food to the hungry, to take care of the sick. Was Jesus as socialist??? (Matthew 25:34-46)